According to Wells Fargo analyst Bonnie Herzog, the likelihood of a tobacco mega merger between Philip Morris (NYSE:PM) and Altria (NYSE:MO) has improved as of late, with a deal possibly on tap for 2017.

Herzog noted that the current political and macroeconomic environment could push the companies into further talks in the near future. She figures a 70% probability of PM acquiring MO within the next 6 to 12 months.

In terms of asking price, the analyst estimates Philip Morris could pay up to $77 per share for Altria, which represents a 15% premium over MO’s Friday closing price around $67.

Talks regarding the reunion of PM and MO have been circulating for quite a while now, and have likely bolstered MO’s share price as a result. The two companies used to be a single entity before splitting into separate publicly traded companies back in 2008.

Another major tobacco merger is also in the works right now, with BTI pursuing a takeover of RAI. Like MO and PM, those two companies also used to be part of the same company before breaking up.

The major tobacco spin-offs of yesteryear, which were designed to unlock additional value, are turning back into mergers as the overall global tobacco market continues to shrink. Cutting costs via mergers are seemingly the only tool these firms have left at their disposal to grow earnings, with revenues steadily declining in most markets.

Altria shares rose 0.8% in Monday morning trading, while Philip Morris was down slightly.

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